Senate panel examines tax breaks

Bills would allow repeal of exemptions

OLYMPIA – From frozen bull semen and chicken bedding to big banks’ mortgage profits, Senate Democrats took aim at the state’s system of tax breaks for businesses Wednesday.

They generated support from people who don’t want the Legislature to close the projected $5.1 billion gap in the state budget solely with cuts, including the Service Employees International Union, AARP and the Our Economic Future Coalition.

They generated opposition from the business owners who said they need the various tax credits, exemptions and preferences to stay afloat, including the state Retailers Association, Farm Bureau and Association for Washington Business.

And sometimes, the Senate Ways and Means Committee hearing generated chuckles or applause from an overflow crowd as members tried to sort through three different bills on tax breaks.

Sen. Tracey Eide, D-Federal Way, argued passionately for her bill that would end sales tax exemptions for frozen semen used on cattle ranches, materials used for chicken bedding and fuel used to heat chicken coops. Money generated by closing those tax exemptions could be used for children’s health care, she said.

“Chickens have feathers, they heat themselves,” Eide said. “Are we going to pick chickens over children?”

The bills say the extra revenue would be used for “essential government services.” Sen. Mark Schoesler, R-Ritzville, asked committee researcher Diane Criswell if the term was defined anywhere. When told it wasn’t, he replied “I think we all have different opinions of what’s essential.”

Schoesler later asked Criswell if it was true that no state places a sales tax on bull semen. “I haven’t done a survey,” Criswell said to laughs from around the room.

One bill, which could go on the fall ballot, would let the Legislature repeal or revise a tax break with a simple majority vote, rather than the two-thirds required by several initiatives on tax increases.

Good, said Diana Thompson of AARP: “Voters did not assume the two-thirds supermajority would apply to closing tax loopholes.”

Bad, said Tim Eyman, the drafter of those initiatives: “What part of the voters ‘no new taxes’ message is unclear? You think the voters are stupid. … You’re proving you’re the stupid ones.”

The state has more than 500 tax preferences. Sen. Steve Conway, D-South Tacoma, questioned why they should be granted with a simple majority but require a supermajority to be removed. Maybe exemptions should need a supermajority to be enacted, he said.

That’s not one of the proposals currently before the committee, which will vote on the bills in a future meeting as the Legislature tries to pass budgets and the laws needed to support them, with 20 days left in its 30-day special session.